Steps to starting a small business - by Katerina Nikolas - Helium

Steps to starting a small business - by Katerina Nikolas - Helium


by Katerina Nikolas

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Those with entrepreneurial instincts are often frustrated by having an employer and take the bold step of establishing their own small business. The most important first step is having a clear goal of the type of business you want to start and research if it is going to be viable in the area you establish it. A large percentage of new small businesses fail, especially when people look to turn an interest or hobby into a business venture, instead of being business inclined in the first place.

Many people fall flat by having an ideal business which reflects their talents but not their business acumen, and this can be fatal. The baker who goes bankrupt by selling exquisite produce without cost analysis is all too common: the baker must factor in every cost when he prices up his apple pies and work backwards from the necessary profit margin to establish the sale price of the pies, how many pies he needs to sell, and how he can best market his product.

It is crucial to research well and prepare a realistic business plan. You will need to project anticipated income, taxes due, overheads, profit, labor costs, and any other related costs to the business you intend to start. The location of premises chosen can be one of the key factors in the success of a business so research well and choose premises wisely. Most small business’s start off by renting premises on a lease basis and should always negotiate a long lease which they have the right to sell on, with rent and rent increases established in the initial contract.

The most important factors are location, business skill, and financing. Many new businesses spend far too much on the initial outlay and borrow at high interest rates to do so. It may work out less expensive to lease equipment initially, or to buy directly from the manufacturer on a payment plan, than to use bank loans to finance everything. The less you need to borrow from banks the more chance you have of obtaining loans where security may not be necessary. The worst mistake many make is to offer their home as security against a business loan.

An excellent way to plan is to consider if you would be able to sell the business as a going concern. Would there be a demand for your business, and can you establish a good enough reputation to profit from the good will which selling your business would bring? If you can answer this is the affirmative then you are on the right track to thinking successfully.

Starting your own business is first and foremost something which necessitates business know how above all else. If you don’t honestly have that, but have a marketable skill which could translate into your own business, it is worth investing in a business course first, or to work in a management role in the field you want to establish your business in. Preparation is key to success and your dream of running your own business is far more likely to succeed if you are able to take control of the business reins fully, and with confidence.

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